1. Prepared By Mr. Bin Chhom1 Chapter 1: Introduction to Macroeconomics I- Definition: -m:aRkUesdækic©- sikSaBIdMeNIrRbRBwtþénexÓnesdæki c©kñúgRTg;RTayTUlaydUcCakareRbIR )as; srub> karvinieyaKsrub/ karnaMecjsrub/ nigéfømFüménTMnij nig esvakmµTaMgGs;. - mIRkUesdækic©- sikSaBIdMeNIrRbRBwtþénmuxgar \riyabf nig esckþIsMerccitþrbs ;shRKas rWRKYsar kñúgRTg;RTaytUc rWÉkbuKÁl dUcCa³ tMrUvkar nigkarpÁt;pÁg;rbs;GñkeRbIR)as;> PaBejacéntMrUvkar rWkarpÁt;pÁg;eTAnwgéfø> CMerIs nig GtßRbeyaCn_rbs;GñkeRbIR)as; CaedIm.

2. Prepared By Mr. Bin Chhom2 kñúgkareRCIserIsnUv neya)aym:aRkUesdækic© eFVI[RbCaCatimYyGac³ 1- BnøÓn b¤ BnüWtkMenInesdækic© 2- beBa¢H[man GtiprNa b¤ bnßykareLIgéfø 3- eFVI [man»n PaBBaNiC¢kmµ b¤ begáIt[manplelIsxagBaNiC¢kmµ. enAkñúgm:aRkUesdækic©viTüaeyIg BinitüemIlkMritTUlayén³ 1- bNþakalaGnuvtþPaB (Opportunity) 2- ]bsKÁEdlRbQmmuxedayexOnesdækic© TaMg mUl dUcCa³ karekIneLIgénkMritéfø GRtanikmµPaB kñúgkarviPaKm:aRkUesdækic©eyIg EtgEtCYbRbTHGBaØatþiCaKnøwH énm:aRkUesdækic©xøH dUcCa ³ GNP, GDP, The unemployment rate, Net Export,...

3. Prepared By Mr. Bin Chhom3 The Diverse Fields of Economics Examples of microeconomic and macroeconomic concerns ProductionPricesIncomeEmployment Micro economics Production/Output in Individual Industries and Businesses How much steel How many offices How many cars Price of Individual Goods and Services Price of medical care Price of gasoline Food prices Apartment rents Distribution of Income and Wealth Wages in the auto industry Minimum wages Executive salaries Poverty Employment by Individual Businesses & Industries Jobs in the steel industry Number of employees in a firm Macro economics National Production/Output Total Industrial Output Gross Domestic Product Growth of Output Aggregate Price Level Consumer prices Producer Prices Rate of Inflation National Income Total wages and salaries Total corporate profits Employment and Unemployment in the Economy Total number of jobs Unemployment rate

4. Prepared By Mr. Bin Chhom4 II- Major Macroeconomic Issues 1-Economic Growth: CakarekIneLIgén TniñplsrubnigTinñplkñúg mñak;². keNIenHmann½yfakMrit CIvPaBrs;enA CamFümekIneLIg. bBaðamYyeTotkMnt;fakarlUtlas;es dækic© Tak;TgeTAnwgeKal neya)ayrbs; rdæaPi)al. ]bmafa »nPaBfvikarbs;rdæaPi)al eFVI[mankarkat;bnßyPaBlUt las;esdækic©. krNI enHdUcCa³ - cMnayelIscMnUlBnV- karx©IluyxageRkA - karmanGRtakarR)ak;x<s;- karkat;bnßykarvinieyaK- karFøak;cuHesdækic©.

5. Prepared By Mr. Bin Chhom5 2-Business Cycles esdækic©manninñkarpøas;bþÚrCabnþb nÞab; KWmaneLIg nigcuHEdleKehAfaxYbGaCIvkmµ. xYbGaCIvkmµsMedAeTAelIkarFøak;cu HnwglMhUrénskmµPaBGaCIvkmµCabn þbnÞab ;Edl)anekIt eLIgCMrujninñakarry³eBlEvg. Figure1-1: Business Cycle Trough Recov ery Peak Recession Trend Growth Rea l GD P Time Trough

6. Prepared By Mr. Bin Chhom6 Trouhg ¬Føak;cuHdl;)at¦ - FFansl;TMenreRcIn. - kMritén TinñplTabeFobeTAnwgsmtßPaBplit rbs;exOnesdækic©. dUecñHmanTMhM énsmtßPaBplitd¾FMminRtUv)an eKeRbI. - R)ak;cMenjGaCIvkmµTabRkumh‘un mYycMnYnmankarxatbg;eTotpg. - KµanPaBeCOCak;elIsßanPaB esdækic©eBlGnaKt CalTV plnaM[shRKasmYy cMnYnKµanqnÞHcg;vinieyaKfµI.

7. Prepared By Mr. Bin Chhom7 Recovery ¬karegIbeLIgvij¦ - ]bkrN_brikçacas;² hYssm½yRtUv)andUrecj. - kareRbIR)as;FnFan/ cMnUl/ nig cMnayrbs;GñkeRbIR)as;cab;epIþm ekIneLIg. - kþIsgÇwmelIGaCIvkmµekIneLIg CalTVplnaM[plitkmµ/ karlk; nig R)ak;cMenj ekIneLIg. - GnikmµPaB nig TinñplsrubekIneLIg.

8. Prepared By Mr. Bin Chhom8 Peak ¬ekIneLIgdl;kMBUl¦ -smtßPaBEdlmanRtUv)aneKeRbIdl;k MritkMBUl. -BlkmµxVH CaBiessRbePTBlkmµEdlmanCMnaj x<s; -vtßúFatuedImsMxan;²Rk naM[éføedIm plitkmµekIneLIg b:uEnþedaysarEt éfø plitplekIneLIgEdr GaCIvkmµenAEtcMenj.

9. Prepared By Mr. Bin Chhom9 Recession ¬karFøak;cuH¦ -skmµPaBesdækic©Føak;cuH. karFøak;cuHenHmann½yfaplitplCat isrub (Gross Domestic Product=GDP) Føak;cuH. -tMrUvkarFøak;cuHCalTVplnaM[plit kmµ nig GnikmµPaB Føak;cuH. enAeBl GnikmµPaBFøak;cuH cMnUlrbs;RkumRKYsarFøak;cuH. -R)ak;cMeNjFøak;cuH naM[ shRKas mYycMnYnmanbBaðaxaghirBaØvt ßú.

10. Prepared By Mr. Bin Chhom10 III- Key Macroeconomic Phenomena 1-Output and Income ¬Tinñpl nig cMnUl¦ National Income: CatMélTwkR)ak;srubénplitplnigesva kmµcugeRkaykñúgesdækic©mYy elIry³eBlCak;lak; Biessry³eBlmYyqñaM.

11. Prepared By Mr. Bin Chhom11 Output or National product: CacMnYnsrubénplitplnigesvakmµcu geRkay EdlRtUv)anplit. ehIyRtUv )anvas;CaÉkta dUcCa KitCaetanénEdkEfb CaetA énRsUvsaLI CacMnYnmnusSénesvakmµkat;sk;. l. tamniymn½yplitplCati (National Output) esµInwgcMNUlsrub (National Income) Edl)an begáIteLIgedayplitkmµTMnij nig esvakmµenaH. GacniyayedayxøIfa eBlEdleyIg sikSaBIplitplCati (National Product or National Output) KWeyIgkMBugsikSapgEdr BIcMnUlCati (National Income)

12. Prepared By Mr. Bin Chhom12 The Circular Flow of Expenditure and Income

13. Prepared By Mr. Bin Chhom13 1.1- Aggregating Total Output ¬Tinñpl srubTaMgmUl¦ CakarbUkbBa©ÚlnUvTinñplxus²Kña CatMélsac;R)ak;. tamry³ karKuN brimaN TinñplénTMnij mYyCamYynwg éføkñúgmYyÉktarbs;eKehIybnÞab; mk bUktMélTaMgenaHcMeBaH TMnij nImYy²Edl)an plit eyIgGacKNnabrimaN én Tinñpl srubEdl)anKitCaduløar.

14. Prepared By Mr. Bin Chhom14 1.2- Real and Nominal Values ¬tMélBit nig tMélrUbPaB¦ -Nominal National Income: CakarbUkbBa©ÚlnUvTinñplxus²Kñ aCatMélsac; R)ak;. karERbRbYlénrgVas; enHGacbNþalmkBIkar ERbRbYlTaMgbrimaN nigTaMg éføCamUldæan rbs;va. - Real National Income : Canic©CakalRtUv)aneKehAfacMn UlCatiCaduløaefr. karvas;EvgenH tMélrbs;Tinñpl mYy² KWminEmnCaéføbc©úb,nñeT KWCa éføefr EdlKitkñúgkMritéføqñaMeKal. dUecñHkrNI Real National Income mankar ERbRbYlKWvaERbRbYlEtbrimaNb :ueNÑaH.

15. Prepared By Mr. Bin Chhom15 1.3- National Income ¬R)ak;cMnUlCati¦ rgVas;Edl)aneRbICaTUeTAbMputé nR)ak;cMnUlCatiehAfaplitplCatidul ( Gross Domestic Product = GDP) National Income: CatMélTwkR)ak;srubénplitpl nigesvakmµcugeRkay kñúgesdækic©mYy elIry³eBlCak;lak; Biessry³eBlmYyqñaM.

16. Prepared By Mr. Bin Chhom16 2- Employment, Unemployment and the Labor Force PaBmankargareF VI¬GnikmµPaB = Employment) sMedAeTAelIcMnYnGñk eFVIkar eBjv½y ¬tamc,ab; enA shrdæGaemrikcab; BI16qñaMeLIgeTA¦mankargareFVI. PaBKµankargareF VI¬nikmµPaB = Unemployment) sMedAeTAelIcMnYnGñk eFVIkareBjv½yEdlminRtUv)an eKeRbI b:uEnþkMBugEtEsVgrkkargareFVI.

17. Prepared By Mr. Bin Chhom17 kMlaMgBlkmµ ( Labor force) KWCacMnYnRbCaCnsrubEdlmank argareFVIbUknwgcMMnYnEdlKµan kargareFVI. cMnYnnikmµCn GRtanikmµPaB = KuN 100 cMnYnénkMlaMgBlkmµ enAeBlEdlexOnesdækic©sßitenARt g; GDP skþanuBleyIgcat;Tukfa kMritén PaBmankargareFVIx<s; b¤eBlxøHmankargareFVIRKb;²Kña (Full employment).

18. Prepared By Mr. Bin Chhom18 3-Inflation and the price Level ¬GtiprNa nig kMritéfø¦ GtiprNa (Inflation) mann½yfaéføCaTUeTAeLIgx<s;min EmnRKan;EtéføénTMnijb¤ esvakmµ EtmYymux b¤BIrmuxenaHeT EtCaéfø esÞIr Et RKb; TMnij TaMgGs;. edIm,IsikSaGtiprNa (Inflation) Gñkesdækic©eRbIsBaØaNBIr ³ - TImYyKWkMritéfø (Price level) EdlsMedAeTAelIkMriitCamFüménéf øTaMgGs; kñúgexOnesdækic©ehIy tag eday (P). - TIBIrKWGRtaGtiprNa (Rate of inflation) CaGRtaEdlkMritéføTUeTA kMBugEt ekIneLIg.

19. Prepared By Mr. Bin Chhom19 ]TahrN_tMélén CPI kñúgEx5 qñaM1998 esµInwg 162,8 nigkñúgEx5 qñaM1997 esµI 160,1. GRtaGtiprNakñúgkMLúgeBlmYyqñ aMKWCa PaKry bMERbbMrYl kMritéfø EckeGaykMritéføqñaMdMbUg ehIyKuNnwg 100. 162,8 – 160,1 GRtaGtiprNa Inflation = x 100 = 1,7 % 160,1

20. Prepared By Mr. Bin Chhom20 edIm,Ivas;EvgkMritéfømFüm Gñkesdækic©begáItnUvsnÞsSn_éf ø (Price Index) EdlCamFümPaKénéførbs;TMnijepS g². snÞsSn_éføEdleKniym eRbICageKKW snÞsSn_éførbs;GñkeRbIR)as; (Consumer Price index = CPI) Edlvas;EvgéfømFüménTMnij nig esvakmµ TijedayGñkeRbIR)as;mFüm (Average consumer).

21. Prepared By Mr. Bin Chhom21 Price of Basket of Goods and Service CPI = × 100 Price of Basket in Base Year CPI in Year 2 - CPI in Year 1 Inflation in Year 2 = × 100 CPI in Year 1

22. Prepared By Mr. Bin Chhom22 ]TahrN_³ manTinñn½ydUctaragxageRkam Year 1 Basket= 4 Coca + 2 Beer Cost of the Basket Consumer Price Index (CPI) (Base year 2005) The Rate of Inflation Price of Coca Price of Beer 20051$2$ 1×4+2×2= 8$/ basket 8/8×100= 100 20062$3$ 2×4+3×2= 14$/ bask. 14/8×100= 175 (175 – 100)/ 100×100 = 75% 20073$4$ 3×4+4×2= 20$/ bask. 20/8×100= 250 (250 – 175)/ 175×100 = 43%

23. Prepared By Mr. Bin Chhom23 Why inflation matters ¬ehtuGVIGtiprNaCabBaða¦ karERbRbYlkMritéfømYy eFVI[mankarpøas;bþÚr tMélBitrbs;rUbiyvtßú. BaküfakMlaMgTijén rUbiyvtßú (Purchasing power of money ) nigtMél BiténrUbiyvtßú (Real value of money ) sMedAeTAelIbrimaNénTMnij nigesvakmµ EdlGacRtUv)an eKTijCamYy nwg cMnYnluymYykMnt;. kMlaMgTijénrUbiyvtßú manTMnak;TMngCaGviC¢man CamYykMritéfø. ]TahrN_ebIsinCakMritéføekIn BIrdg enaHmYyduløanwgTij)anEtBak; kNþal b:ueNÑaH ebIsinCakMritéføfycuHBak;kNþalenaH naM[mYy duløanwgTij)anBIrdg. GtiprNa k¾kat;bnßypgEdrnUvtMélBiténGVImYy Edl éførbs;vaefr KitCasac;R)ak;. dUecñH tMélBiténR)ak;Ex KNnIsnSM RtUv)ankat;bnßyedayGtiprNa.

24. Prepared By Mr. Bin Chhom24 4- The Interest Rate ¬GRtakarR)ak;¦ GRtakarR)ak;KWCaéføEdlRtUv)an eKTUTat;cMeBaHluyx©IsMrab;ry³e BlmYykMNt; ehIyRtUv)an eKKitCacMnYnPaKrykñúgmYy duløaEdl)anx©I. ]TahrN_ GRtaTUTat; 12 % kñúgmYyqñaM mann½yfa Gñk x©I RtUvTUTat; 12 % kñúg 1qñaM sMrab; erogral;duløa EdleKx©I.

25. Prepared By Mr. Bin Chhom25 4.1- Interest Rates and Inflation ¬GRtakarR)ak; nig GtiprNa ¦ etIGtiprNaCH\TVBlelIGRtakarR )ak;dUcemþc? ]bmafa x©I $100 sgvij $108 mann½yfa $100 CaR)ak;edIm cMENkÉ $8 CakarR)ak;. kñúgkrNIenHGRtakarR)ak;rUbPaBe sµI $8. enAeBlkMritéføekIneLIgnaM[tMélén duløaEdl GñkeRbI sMrab;TUTat;fycuH. GRtakarR)ak;Bit vas;nUvplcMnUlelIkm©IBit (Real return on loan) EdlCakMlaMgTijénluy.

26. Prepared By Mr. Bin Chhom26 - ebIsinCakMritéføkñúgqñaMenaHen A efrdédl GRtakarR)ak;BitesµInig 8% BIeRBaH Kat;GacTijTMnijnige s vakmµeRcInC agmun 8% CamYy nwg $108 eFobnwg $100 R)ak;edIm. -ebIsinkMritéfø ekIn 8% enaHGRta karR)ak;BitesµI 0 BIeRBaH $108 T ij)an TMnijkñúgbrimaNdUc $100 EdlKat;[x©IdMbUg. -ebIsinkMritéf ekIneLIg 10% enaHGRtakarR)ak;BitesµInwg -2%. mann½yfaR)ak; $108 nigTij)anbrimaNTMnijticCagkm©Ied Im $100.

27. Prepared By Mr. Bin Chhom27 4.2- why Interest Rate Matter ¬ehtuGVI)anCaGRtakarR)ak;manb Baða¦ karERbRbYlGRtakarR)ak;BitCH\TViBlel Isþg;darénkarrs;enArbs;GñksnSMpgGñ kx©Ipg. ]ThrN_GñkcUlnivtþn_CaeRcIn enAedImTsvtSqñaM 1990s enAeBlGRtakarR)ak;Føak;dl; 2-3% naM[GñkcUl nivtþn_CYbRbTHnUvkarFøak;cuHy:agx øaMgéncMNUlBitrbs;BYkeK. pÞúyeTAvijbNþaGñkx©Inwgl¥CagCam YynwgGRtakarR)ak;BitTab. GRtakarR)ak;manbBaðapgEdrcMeBaH exOnesdækic©TaMgmUl. GRtakarR)ak;BitCYykMNt; TMhM karvinieyaK. GRtakarR)ak;Bitx<s;karvinieyaKticCag GRtakarR)ak;BitTab. dUecñHtamry³\TViBl énkarvinieyaK GRtakarR)ak;Bit k¾CH\TViBlelIGnikmµPaB nig TinñplkñúgdMeNIrkarx©I.

28. Prepared By Mr. Bin Chhom28 We can calculate real interest rate in mathematical terms: r = i – I r: the real interest rate, i: the nominal, or market, interest rate, I: the inflation rate,

29. Prepared By Mr. Bin Chhom29 Real interest rates in the years following: YearInterest rate %Inflation rate % Real interest rate % 19706.55.70.8 19755.89.1-3.3 198011.513.5-2.0 19857.53.63.9 19907.55.42.1 19955.52.82.7 20005.93.42.5